Archive forJune, 2017

The culture secretary has said she is “minded to” refer Rupert Murdoch’s 21st Century Fox takeover of Sky to the competition watchdog. Karen Bradley’s decision is a blow to the media mogul’s hopes of having the £11.7bn deal waved through without further scrutiny. Mr Murdoch already owns 39% of the satellite broadcaster. An earlier attempt to take over Sky was abandoned in the wake of the phone hacking scandal. Ms Bradley told the Commons that Ofcom’s report into the deal found it risked the Murdoch family having “increased influence” over the UK’s news agenda and the political process. “On the basis of Ofcom’s assessment, I confirm that I am minded to refer to a phase two investigation on the grounds of media plurality,” she said.

A global cyber-attack that affected companies around the world may have started via corrupted updates on a piece of accountancy software. Fingers are increasingly pointing to a piece of Ukrainian tax-filing software, MEDoc, as the source of the infection, although the company denies it. Malware generally infiltrates networks via email attachments that users click on in error. Microsoft described the method as “a recent dangerous trend”. The cyber-attack has caused disruption around the world and infected companies in 64 countries, including banks in Ukraine, Russian oil giant Rosneft, British advertising company WPP and US law firm DLA Piper.

The controversial businessman Sir Philip Green sold the BHS business to dodge responsibility for its insolvent pension schemes if the firm should go bust, says the Pensions Regulator. The claim is made by the regulator in its report on the sale of BHS in 2015 and its collapse a year later. In February, Sir Philip finally agreed, after months of pressure, to pay £363m into the BHS pension schemes. A spokesman for Sir Philip said only “the matter is now closed”. However the report gives, for the first time, some details of the warning notice that the regulator gave to Sir Philip in November last year as negotiations over resolving the BHS pension scheme deficits dragged on. “The main purpose of the sale [of BHS] was to postpone BHS’ insolvency to prevent a liability to the schemes falling due while it was part of the Taveta group of companies ultimately owned by the Green family, and/or that the effect of the sale was materially detrimental to the schemes,” the regulator says.

The US firm that supplied cladding used on London’s Grenfell Tower says it has ended global sales of the product for use in high-rise blocks. Arconic said it was discontinuing sales of Reynobond PE for tower blocks due to “issues” identified by the fire, which is feared to have killed at least 79. The government said 75 buildings in 26 council areas had now failed fire safety tests – every one tested so far. Theresa May said councils need to speed up tower block safety tests in England. Communities and Local Government Secretary Sajid Javid said all hospitals and schools had also been asked to carry out “immediate checks”.

Holland & Barrett, the UK’s biggest health food retailer, is being bought by a Russian billionaire for £1.8bn. L1 Retail, a fund controlled by Mikhail Fridman, is buying the 1,150-store chain from Carlyle, the US private equity firm, the Financial Times reported. Carlyle acquired Holland & Barrett as part of its $3.8bn purchase in 2010 of US firm Nature’s Bounty, now NBTY. The chain has about 600 stores in the UK as well as China, India and the UAE. The retailer, which employs more than 4,000 people, was founded in Bishop’s Stortford, Hertfordshire, in 1870. Holland & Barrett has opened more than 300 stores in the seven years since the private equity takeover, the Financial Times reported.

About three million EU citizens living in the UK would be allowed to stay after Brexit, Theresa May has proposed. A new “UK settled status” would grant EU migrants who had lived in the UK for five years rights to stay and access health, education and other benefits. Proposals were unveiled at a Brussels summit but are dependent on EU states guaranteeing Britons the same rights. German Chancellor Angela Merkel called the plan a “good start”, but Labour said it was “too little, too late”. Many EU citizens in the UK, and Britons living abroad, are worried about their status once Brexit happens. The UK’s exit deadline is 30 March 2019. Addressing other EU leaders at her first summit since the general election, the prime minister said she did not want anyone to have to leave or families to split up. “No one will face a cliff edge,” she said. “The UK’s position represents a fair and serious offer, one aimed at giving as much certainty as possible to citizens who have settled in the UK, building careers and lives and contributing so much to our society.”

UK summer fruit and salad growers are having difficulty recruiting pickers, with more than half saying they don’t know if they will have enough migrant workers to harvest their crops. Many growers blame the weak pound which has reduced their workers’ earning power, as well as uncertainty over Brexit. About 80,000 seasonal workers a year pick and process British fruit and veg. Most of them are from the European Union, mainly Romania and Bulgaria. One in five growers says they already have fewer pickers than they need. British Summer Fruits, the body which represents soft fruit growers, says labour shortages are now the worst seen since 2004. Recruitment was getting harder even before the vote to leave the EU. But the industry believes Brexit is exacerbating the problem and if access to non-UK workers dries up, it could cripple home-grown berry production.

Uber boss Travis Kalanick has resigned as chief executive after pressure from shareholders, a spokesman has said. Mr Kalanick will remain on the board of the firm, however, the New York Times reported. His resignation comes after a review of practices at the firm and scandals including complaints of sexual harassment. Last week he said he was taking an indefinite leave of absence. Five major Uber investors demanded Mr Kalanick’s immediate resignation in a letter on Tuesday, the newspaper said. Mr. Kalanick reportedly said: “I love Uber more than anything in the world and at this difficult moment in my personal life I have accepted the investors request to step aside so that Uber can go back to building rather than be distracted with another fight.” Last week Mr Kalanick took an indefinite leave of absence from the firm as part of an effort to create “Uber 2.0”. His leave also comes after the sudden death of his mother in a boating accident. The ride-hailing company has had a series of recent controversies, including the departure of other high-level executives.

The EU’s chief negotiator said there would be “substantial” consequences from Brexit after the first round of talks with the UK. Michel Barnier said he was “not in the frame of mind to make concessions or ask for concessions”. UK Brexit Secretary David Davis said talks got off to a “promising start”. The UK appears to have conceded to the EU’s preferred order for the talks which will mean trade negotiations do not begin immediately. Mr Davis and Mr Barnier gave a joint press conference after day one of the talks in Brussels. The initial focus will be on expat rights, a financial settlement and “other separation issues”.

Brexit Secretary David Davis will call for “a deal like no other in history” as he heads into talks with the EU. Subjects for the negotiations, which officially start in Brussels later, include the status of expats, the UK’s “divorce bill” and the Northern Ireland border. Mr Davis said there was a “long road ahead” but predicted a “deep and special partnership”. The UK is set to leave the EU by the end of March 2019.

Tesco is cementing its recovery in the UK after its first-quarter sales growth beat expectations. Like-for-like sales – which strip out the impact of new stores – rose by 2.3% in the three months to 27 May, boosted by demand for fresh food. Analysts had expected a rise of 2.2% after Tesco reported an increase of 0.7% in the fourth quarter. Tesco will face shareholders on Friday who are expected to query a pay deal awarded to chief executive Dave Lewis. Mr Lewis was given £142,000 to help him move to a house closer to Tesco’s headquarters. This was on top of his £4.1m pay packet.

A European Union (EU) law to abolish roaming charges for people using mobile phones abroad comes into force today. The new rules mean that citizens travelling within the EU will be able to call, text and browse the internet on mobile devices at the same price they pay at home. The European Commission said the end of roaming charges was one of the greatest successes of the EU. But a UK consumer group warned phone users could face “unexpected charges”. Until now roaming, or connection, charges have been added to the cost of calls, texts and internet browsing when consumers from one EU country travelled to another and connected to a mobile network there.

Uber boss Travis Kalanick plans to take time away from the company, and could return in a diminished role. It comes after a review of management and practices at the firm, which is facing a number of scandals including complaints of sexual harassment. Uber’s board on Sunday voted in favour of the recommendations from the review. But two days later, board member David Bonderman made a sexist remark at a meeting about the recommendations and has now stepped down. In the email to staff, Mr Kalanick said the decision to take leave, which also comes after the sudden death of his mother in a boating accident, is part of an effort to create “Uber 2.0”. “For Uber 2.0 to succeed there is nothing more important than dedicating my time to building out the leadership team,” Mr Kalanick wrote. “But if we are going to work on Uber 2.0, I also need to work on Travis 2.0 to become the leader that this company needs and that you deserve.” Mr Kalanick’s email did not say how long he would be away from the firm.

The government should rethink its Brexit strategy, following last week’s election, according to the engineering industry organisation, the EEF. It said without a more pro-business stance, the resulting political instability may force more firms to alter their plans “away from the UK”. The EEF is the latest business organisation to call for a rethink of the government’s Brexit plans. It wants access to the single market to be at the heart of Brexit negotiations. The EEF said even before the election firms were already altering or thinking about changing their business plans because of the Brexit vote. Terry Scuoler, EEF chief executive, said the government had already “wasted a year” and needed to “move away from its previous rhetoric and start repairing relations with EU partners”. For the EEF that meant putting access to the single market and staying in a customs union at the centre of the government’s negotiations and involving business groups in the talks over trade. It is also calling for a “suitable” transition period to be “firmly back on the table” as part of the Brexit talks.

After trading almost 2.5% lower at the $1.263 level early on Thursday as the election result became clear, the pound recovered to trade the rest of the day close to $1.274 for a net 1.6% fall. From the open, the FTSE 100 Index jumped by 1.3% on the back of non-Sterling earners such as the mining, oil and pharmaceutical groups before closing the day around 0.9% higher at 7515. The more domestic plays were generally negative throughout the day.

After most of the polls pointed to a reasonable Conservative margin of victory, the electorate has decided otherwise. In the event, the Conservatives have paid the price for running a lacklustre, unimaginative, election campaign in the face of an optimistic message from Labour. We know that ‘all that glisters’ may not be gold but the giveaways offered by Jeremy Corbyn‘s Labour Party, however funded, were attractive enough to turn many voters heads. Consequently, the country must now soldier on with a hung parliament (no party has an overall majority over 325 seats. The latest results (with 5 yet to be declared) show the Conservatives on 313 (down from 330 pre-election) and Labour on 261 (up from 229).

It’s all relative but the wall-to-wall onslaught of electioneering should have ceased by this morning to be replaced by the steady patter of feet to polling stations. There will not be much that the markets can do until indications of the shape of the election results emerges tomorrow. Typically, it will be Sterling that acts as the bellwether in this latest political storm. Any perceived weakening of the Conservatives’ position can be expected to weaken the currency and stimulate demand for non-Sterling earners. However, other blue chips are likely to decline as investors contemplate the prospect of hikes in the rates of both corporate and personal taxation not seen in decades. Of course, the situation will not be that clear-cut since some companies can expect to benefit from new Government expenditure on the promises outlined in the manifestos of Labour and the SNP.

As we run, thankfully, into the final 24 hours of campaigning, the polls show a range of estimated leads for the Conservatives over Labour of between 4 percentage points (YouGov) and 11 points (ICM). The question remains, even if the Conservatives come out ahead, will it be by enough to represent a potent force in the Brexit negotiations or will they continue to be hobbled by challenges from other parties in the Commons. Sterling held close to the $1.29 level while the FTSE 100 Index, similarly, kept in a narrow range just below the 7525 level. The latest poll result, released overnight by Opinium, points to a 50-seat majority for the Conservatives. As we have said before, after all the hoo-ha, both the pols and the bookies’ odds could be providing a false picture.

Inevitably, Monday’s electioneering clashes between Labour and the Conservatives pivoted around national security and the terrorist threat. A call from Mr Corbyn for Mrs May to resign on her record as Home Office Secretary in reducing police numbers needed to be countered by Mr Corbyn’s own parliamentary history of voting against anti-terrorist measures. While elections tend to generate a lot of heat, rarely is enough light emitted for voters or the markets to make a seriously-informed judgement. According to the Daily Telegraph’s ‘rolling average of eight polls’, the proportion of votes for the Tory and Labour parties have been converging since the 21st April with the gap now standing at 7 points overall – Conservatives 43.4% and Labour on 36.5%. For those inclined to ignore the polls, betting odds continue to point to the Conservatives being returned with a majority but it must be remembered that the odds are a function of betting activity which may not necessarily prove to be correct. Something that is adding piquancy to this particular election, apart from the high number of marginal constituencies being contested, is the effect of the Brexit vote where voters may decide to switch from normal allegiances to whichever party they feel will best protect their interests in dealing with the European Union. It is against this background that Sterling moved marginally higher to the $1.29 level and the FTSE 100 eased…

The big news from the US on Friday was the large drop in the May Non-farm payroll number to a gain of just 138,000 against the widely-expected 185,000. At 4.3%, the unemployment rate hit a 16-year low but the underlying message was of a slowing economy. Consequently, the outlook for the trend in future interest rates has turned softer. However, despite this dip towards a more typical jobs growth rate, it is still widely expected that at the US Federal Reserve’s next FOMC meeting on the 14th June will produce another 25-basis point rise. A question mark is raised though over the outlook for the rest of the year, particularly September, for any other rate rises. Inevitably, the US bond market yields eased in line with the implied lower rate trajectory while the Dollar also lost ground.

With just a week to go to Polling Day, another YouGov poll has indicated a further erosion of the Conservatives’ lead over Labour to just 3 points. Just for good measure, other polls are giving the Tory Party a moderately comfortable win. Where does the truth lie and can the polls, misleading in the past, be expected to be any more accurate this time ? The bookmakers’ betting odds still point to a Conservative win but the much lower odds being offered on the Conservatives compared to the Labour Party has, unsurprisingly, made a hedge bet for Labour a much more active option.

The revelation of a new-style YouGov poll on Wednesday shattered any complacency about the likely outcome of next week’s election. Having inherited a Conservative majority in the last General Election courtesy of David Cameron, Theresa May appears to have risked it all for nothing with the poll suggesting a possible loss of 20 seats to 310 seats (out of 650), resulting in a hung parliament.